Sharekhan Maintains Buy On Power Sector PSU Stock, Sees Upto 20% Potential Upside

Sharekhan in its recent report on Power Grid Corporation of India Ltd. has assigned a "Buy" on the stock with a target price of Rs 265 apiece. The stock is likely to fetch up to 20% return if purchased at the current market price, considering the given target price by the brokerage firm. Power Grid Corporation of India is a Maharatna CPSE operating in the power sector. It is a large-cap stock having a market capitalisation of Rs 1,55,169 crore.

Stock Performance and Returns

Power Grid Corporation of India's share last traded at Rs 222.45 apiece on NSE, up 0.16% as compared to the previous close. Its 52 week low as on 26 September 2022 is Rs 186.35 apiece and 52 week high as on 10 May 2022 at Rs 248.35 apiece, respectively.

It has fallen 0.74% in the past 1 week. In the past 3 months, it gained 3.11%. It has given 5.28% positive return in 1 year, 85.38% in 3 years and 53.48% in 5 years, respectively.

Valuation - Maintain Buy on Power Grid with an unchanged PT of Rs. 265

Sharekhan said, "Robust work-in hand and recent project wins provide good earnings visibility (we expect 10% PAT CAGR over FY22-25E) along with RoE of 19%. Earnings growth visibility and dividend yield 5-6% makes valuation attractive at 1.7x/1.5x FY24E/FY25E P/BV. Hence, we maintain our Buy rating on Power Grid with an unchanged PT of Rs. 265."

Key Risks

According to sharekhan, the Key Risks to their buy call would be 1) Slower-than-expected capitalisation of projects and 2) Inability to win new projects under tariff-based competitive bidding route.

Disclaimer - The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.